Budget ’17 Preview: Advanced Capabilities in Focus

WASHINGTON — As US Secretary of Defense Ash Carter crossed the nation last week previewing the Pentagon’s fiscal 2017 budget request, a few trends appear to be forming for the Department of Defense.

Carter’s comments made clear that the Pentagon will not allow itself to be fully distracted by the ongoing fight against the Islamic State group, commonly known as ISIS or ISIL, and instead will push to continue long-term modernization programs to battle "great power" competition.

“We must have — and be seen to have — the ability to impose unacceptable costs on an advanced aggressor that will either dissuade them from taking provocative action, or make them deeply regret it if they do,” Carter said Feb. 2, adding, “In this context, Russia and China are our most stressing competitors.”

Looking at what Carter chose to reveal early is a good way to tell what themes the Pentagon wants to emphasize in its budget, said Ben FitzGerald of the Center for New American Security.

“While the secretary did not use the term offset strategy explicitly in his budget preview speech, the impact of offset thinking is clear in the budget decisions he unveiled,” FitzGerald said, praising how the budget is “seeking to repurpose existing capabilities to increase the force’s range and lethality."

Along those lines, Carter announced funding to upgrade standard weapons for the Navy, such as $2 billion spread over the next five years to purchase 4,000 Tomahawk missiles and upgrade them with new seekers, and $2.9 billion in funding for the Navy’s SM-6, to buy 650 of the weapons and advance them to become an anti-ship missile.

Added to that is “about $927 million over the [Future Years Defense Program]” for the Long Range Anti-Ship Missile, and another $418 million over the FYDP for the Advanced Anti-Radiation Guided Missile – Extended Range (AARGM-ER) weapon, Carter said.

The Pentagon is requesting $71.4 billion in research-and-development funding for 2017. Carter also announced a quartet of new technologies he would like to invest in, such as small swarming drones and mounting sensors onto a small diameter bomb.

“One way of looking at this is that the current leadership team has set a clear direction and made important down payments on an enduring technology strategy," FitzGerald noted. “A more cynical view is that they’ve signed up for some big bills that they won’t be around to have to pay. I’m not so cynical with this budget, it looks like the leadership team has done some deep thinking, made hard choices and are setting a course for the future.”

While the budget has an eye to the future, Doug Holtz-Eakin, who directed the Congressional Budget Office from 2003-2005, said Carter's remarks indicate the fight of today will be largely funded by the overseas contingency operations (OCO) account.

“[Carter] was talking about a base budget focused on traditional threats and capabilities – Russia, China, North Korea and Iran – and that leaves the battle with ISIS and the modern war on terror to the OCO account,” said Holtz-Eakin, now president of the American Action Forum.

Although he did not specifically say the money would come from OCO, Carter announced $7.5 billion for the fight against the Islamic State group and another $1.8 billion for precision munitions, at a time when US stockpiles of the weapons are thinning.

The Pentagon is also using OCO dollars for the European Reassurance Initiative (ERI), the umbrella under which funding for European support has been funneled following Russia’s invasion of Ukraine in 2014. The fund has more than quadrupled, going from $789 million to $3.4 billion.

A large chunk of that funding — $2.8 billion — will belong to the Army and reside in the OCO account, according to a defense official. A small amount of that funding was pushed from the base budget into OCO for the ERI. $1 billion will go toward putting a “heel-to-toe” armored brigade combat team in theater, so from now on, there will be a Stryker brigade, an infantry brigade and an armored brigade in Europe 24/7 on a rotational basis. Another $1.8 billion will go toward putting prepositioned equipment, such as tanks, back into Europe.

And some bills simply have to be paid. One victim appears to be the ramp of the F-35A joint strike fighter for the Air Force, with Defense News learning the service plans to cut five of the jets from its FY17 request, dropping the buy from 48 to 43. The Air Force cut is purely budget driven, and does not reflect waning confidence in the program, sources said.

The good news for contractor Lockheed Martin is that the Navy and Marine Corps buys should make up for this decrease, and then some. The Pentagon’s overall budget submission will include money to purchase 10 additional F-35C models for the Navy and 3 F-35B models for the Marine Corps over what had been planned, Carter announced last week.

Meanwhile, the service will push off retiring its fleet of A-10 Warthog aircraft until 2022, while fully fund the Long Range Strike-Bomber and KC-46 tanker. The budget submission also includes commitment to moving forward with the Joint Surveillance Target Attack Radar System recapitalization, the Combat Rescue Helicopter, a replacement for Air Force One, and restocking munitions expended in the fight against ISIS.